Google beats claims in Texas patent suit hotspot

Google has escaped a patent infringement lawsuit after the US Court of Appeals for the Federal Circuit ruled that data servers do not constitute a “place of business” in the district where the complaint was filed.

The Federal Circuit said that a “place of business” must have an employee or agent working at the site on behalf of the defendant, and that contractors such as internet service providers (ISPs) do not count.

The decision may resolve confusion over whether businesses which store data or lease shelf space in a district, but do not have any employees on the ground, may be sued for patent infringement there.

The suit was filed at the US District Court for the Eastern District of Texas, which has gained a reputation as a hotspot for patent infringement suits, proving popular with non-practising entities (NPEs) or ‘patent trolls’.

A 2011 report co-authored by former US Patent and Trademark Office director Andrei Iancu said judges in the district tended to let patent claims filed there be decided by a jury, rather than on summary judgment.

Last year, Apple went as far as to close two of its stores in the district, in a move which experts said was likely a way to protect itself from patent suits there. That’s because for a district court to have jurisdiction to hear a patent suit, a defendant not based in the district must commit infringement and have a regular “place of business” there.

Google has been able to avoid having to face infringement claims in the district because its only places of business there are its global cache servers, which store data. The servers are managed by an ISP who is contracted by Google.

The suit was brought by Super Interconnect Technologies, who accused Google of infringing three hardware patents.

Google petitioned the Federal Circuit for a writ of mandamus, which would order the Eastern Texas court to dismiss the case for lack of jurisdiction, or transfer it to an appropriate venue.

The technology corporation argued that the data servers did not qualify as a place of business because it had no employees working in the district.

The appeals court had previously denied this form of relief to Google in a separate case in the district because there was not yet a disagreement “among a large number of the district courts” on the jurisdiction issue.

Circuit Judge Jimmie Reyna dissented from that decision, arguing that conflicting views were likely to appear in different districts.

According to yesterday’s ruling, that is exactly what has now happened, warranting mandamus relief in favour of Google.

In 2018, the Eastern Texas district court ruled in a separate case that leased shelf space constituted a regular and established place of business, while the US District Court for the Southern District of New York has taken the opposite view.

The Federal Circuit has now settled the issue, ruling that for a site to qualify as a ‘place of business’, it requires the “regular, physical presence of an employee or other agent of the defendant”.

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